TV panel supply constraint forecast

PROJECTIONS:Demand this year is expected to grow 3 percent and capacity by 4 percent, and next year demand will increase 10 percent, NPD DisplaySearch said

By Lisa Wang / Staff reporter

A supply constraint of LCD panels is expected to occur in the second half of this year driven by demand for energy-efficient TVs in China, the world’s biggest LCD TV market, providing a chance for local panel makers to improve their profitability, US market researcher NPD DisplaySearch said yesterday.

Supply of 39-inch LCD TV panels has become tight, an early positive sign that inventory reductions by Chinese TV vendors are well on track, NPD DisplaySearch Greater China region vice president David Hsieh (謝勤益) told reporters on the sidelines of a forum.

The price of a 39-inch LCD TV panel has dropped to US$218 over the past three months, according to information provided by NPD DisplaySearch earlier this month.

In addition, TV sales for the upcoming annual Labor Day shopping season in China are expected to be good, which would also help digest excessive inventory and pave the way for inventory replenishment and a price rebound in the second half, Hsieh said.

TV sales in China this year may grow by 9 percent year-on-year based on past data, Hsieh said.

“Besides, China is likely to unveil a new program to heavily subsidize the purchases of larger energy-efficient TVs, such as 45-inch or 46-inch TV sets, in May or June. That will trigger demand in the second half,” Hsieh said.

“We believe panel supply will be tight in the second half, which will help panel makers improve their [financial] situations,” Hsieh said.

Increased demand would “boost prices slightly in the second half after they flatten out in June,” he said.

Recently, panel makers have started making profits selling TV panels, he said. In addition to China, demand in Europe is also reviving, especially for 39-inch and 50-inch TV panels, he said.

Taiwan’s top panel maker, Innolux Corp (群創光電), the biggest TV panel supplier to China’s major TV brands, is expected to make NT$1.51 billion (US$50.5 million) this quarter, ending nine quarters in the red, Credit Suisse analyst Jerry Su (蘇厚合) said. In the third quarter, Innolux may make even better net profits of NT$5.43 billion, Su forecast.

“Overall, this year will be a better year than 2012 as [the industry] is recovering from a trough in terms of factory utilization and technology development,” Hsieh said. “Next year, panel shortages are likely to be even more severe as demand outpaces capacity expansion.”

Global demand for TV panels this year is expected to grow 3 percent year-on-year, while capacity is expected to grow by 4 percent, NPD DisplaySearch said.

Next year, demand will increase 10 percent, while capacity will only grow 4 percent, the researcher forecast.